The Department of the Treasury issued a request for comment Monday on Biden’s March executive order on cryptocurrency, creating a formal process around an issue that has already generated significant discussion. The Treasury is accepting comments through Nov. 3.
The order specifically directs the Treasury, along with other applicable agencies, to assure that laws and regulations prevent national security and financial risks. The Treasury is to use law enforcement and other measures to compel crypto entities to comply with anti-money laundering and counter the financing of terrorism best practices. Now, it’s requesting comment on how the agency alone and through private-public partnerships can best mitigate risks.
Though commenters can provide input as they see fit, the Treasury listed specific questions it would like addressed in the report. Most important for DeFi include questions about what risks are attached to peer-to-peer payments, how to maximize public-private information sharing for the purposes of monitoring illicit activity and how financial institutions offering cryptocurrencies can better integrate know-your-customer controls.
The agency also asked what “additional steps” it should take in order to prevent the use of digital assets by criminals. The Treasury is currently being sued by six plaintiffs, supported by Coinbase, over sanctions against cryptocurrency trader Tornado Cash. Tornado Cash was sanctioned because, according to the Treasury, it had been used to launder over $7 billion.
Now, the agency appears to be inviting comment on the move, though the phrasing implies that the agency is more interested in adding restrictions than removing sanctions. The agency also asked for “specific areas” where it can provide further clarity on AML/CFT and sanctions obligations, and how it should address “mixers and other anonymity-enhancing technologies.”